Transcript: Health Minister Jonathan Coleman

Now health... and melanoma drugs have got it back in the headlines this year.

But with threats of strikes and complaints from DHBs we've also heard more questions about just how our health services are being funded... or squeezed.

So earlier I spoke to Health Minister Jonathan Coleman and asked just how much of the $39 million new money for Pharmac announced this week would go to Opdivo.

Jonathan Coleman: Well, I can't tell you how much exactly, Lisa, because all those negotiations are subject to commercial confidentiality, but what I can say is the 124 million over the next four years with 39 million in the coming year is going to provide Pharmac with some real options, and they're consulting now on a package of seven drugs, one of which is Opdivo, which is a drug for stage IV metastatic melanoma. But there's also some other really interesting drugs in that package, drugs for hepatitis C, that will make a big difference.

Lisa Owen: Minister, you indicated on The Paul Henry Show that they have sufficient money in the budget now to fund 350 people a year for that drug, so is that your expectation of what the money will be spent on?

Absolutely it is, so 350 New Zealanders have been dying each year of melanoma. Pharmac's estimate is that that will be the ongoing number that will be treated with this new pharmaceutical. They've obviously still got to go through the consultation process, but they think there'll probably be a few more in the first year, because obviously there's a number of people still waiting for that drug. So those are the round figures. It's going to make a huge difference to the quality of life for thousands of New Zealanders over the coming years.

The Pharmac CEO, Steffan Crausaz, told us just a few weeks ago that there were about 20 drugs that they would fund ahead of Keytruda. Is Opdivo so much better than Keytruda that those other drugs are being leapfrogged and it's going to number one on the list?

Yeah, so at any one time, Pharmac are considering about 50 different drugs, vaccines and devices which they wish to fund. All the advice which they have considered tells them that Opdivo is actually the best drug at the best price and it's going to help the greatest number of New Zealanders. But, look, in the end, it's up to politicians to provide the funding and then Pharmac make the decisions on which drugs they fund, and it's very important that we have that separation. I think this whole episode illustrates that.

Minister, what I'm curious about and what I'm trying to clarify is, is Opdivo so much better than the 20 other drugs which were for other conditions that it has gone to the top of the list, that you are saying your expectation is that a melanoma drug will be funded?

No, well, it hasn't gone to the top of the list above other drugs. We have provided funding, and Pharmac has said, 'With that funding, this is the package of drugs we'll be able to provide,' so literally they have a list and they can move through that list as the funding dollars increase. So there's no suggestion that drugs have been leapfrogged for political purposes at all, and we don't direct Pharmac. And I get briefed by Pharmac, but I've always said, 'We cannot direct you,' and that's the clear understanding. Politicians provide the funding; Pharmac make the decisions.

So how much did Pharmac want from you in this year's budget?

Oh, look, Pharmac would always want more money, and I would always want more money from the Finance Minister, but the realities are this is a very good package, and at $39 million you're getting seven new drugs – you're obviously getting Opdivo, you're getting two hepatitis C drugs, you're getting a range of cancer drugs, you're getting estradiol patches, you're getting erythromycin for bronchiectasis. Good package.

So why not tell us how much they asked for? How much did they ask for? Because Labour says they need at least 53 million more than what was announced. So let's clarify it. What did Pharmac ask for?

Look, Pharmac have not asked me directly for a specific amount. They may have sent correspondence at times indicating a range of amounts that they'd want, but this is the amount they're getting. That's the bottom line.

So will you release those papers?

The thing is—

Will you release those papers, Minister?

I'm happy to release—We release a whole lot of budget papers at the time of the Budget.

No, so you will undertake now to release the documents that show us exactly how much Pharmac was wanting?

If you send us in an OIA, we'll definitely have a good look at it and we'll respond to it. There's nothing to hide here. Look, this is a great announcement – $39 million, 124 over four years. We're not actually hiding anything.

Well, I want to follow the money. In real terms – real terms – how much has health spending increased under the National Government in real terms?

Well, you know it's gone up by $4 billion over the past eight years, and the focus— The difference in the political argument is we're about increasing access to services and doing more, and we've clearly done that – 50,000 more operations, 100,000 more—

I'm sorry to interrupt you, Minister, but my question is – in real terms, how much has health spending increased? Because in—

I can't give you that figure right now, but what I can tell you is it's increasing above the rate of inflation.

So you don't know how much it's increased? As health minister, you can't tell me—

Yeah, it's increased by $4 billion.

No, no, in real terms, as health minister, you can't tell me how much it's increased in real terms?

I haven't got that figure with me now, but what I am focused on is delivering more operations, more doctors and nurses into the system, more appointments, and that's very clearly what we've done. The difference between our argument and Labour's is they just want more money; we want more services.

We'll talk a bit more about the operations in a little moment, but in July 2015, you said in the House that increases in funding were not meeting all inflationary pressures.

Well, we've fully funded for demographics, but, actually, you can't tell till the end of the financial year if you've fully met inflation or not, and, in actual fact, we have been. So we had a figure of 0.6 percent in there for inflationary pressures for the last year. Inflation was 0.4 percent, so, actually, we have funded ahead of inflation. But, look, there's constantly got to be reprioritisation within health. I mean, that has been the reality of the funding that we've been allocated. It's part of a wider fiscal strategy, and that's why the books are back in surplus.

So today, though, Minister, you are telling me categorically – categorically – that this government has increased health spending in real terms during its terms?

Look, I need to go back and check all the figures, but during the time that I've been minister of health, funding has been ahead of inflation when you look back over the past year.

So you're not sure, Minister? You're not sure whether health funding has increased in real terms?

Well, no, it has increased in real terms overall. It's been ahead of inflation.

I just want to be very clear on this, Minister. You just said then that you would need to go back and check and you could only speak of the time that you were health minister?

Yeah, but I think you're looking for exact figures, so if you look at the cumulative inflation rate over the last seven years, I mean, we've increased funding by $4 billion. We're ahead of the rate of inflation.

So there's no shortfall, in your view, in real terms?

No. Well, I don't know if we're talking about the same thing here, Lisa.

Well, look, I just want to—

But, look, we are keeping ahead of inflation with our funding of health.

And demographics?

But there's a difference—

And demographics, Minister?

Yeah, so when you increase— when you factor demographic pressures in as well, so you're talking about the global number versus a breakdown into demographics and inflation, but you can't argue with the fact health funding has gone up by $4 billion, so from 11.9 to $15.9 billion.

All right, Minister, I just wanted—

So that is ahead of the rate of inflation.

I want to discuss some figures with you so that we—

As opposed to the factor that you use for inflation.

Okay, I want to be—

But even with the factor for inflation, we're ahead of it over the last year.

Minister, I want to put some figures to you. A CTU analysis estimates that the health budget is a billion dollars worse off in real terms than it was six years ago. The Greens calculate an 8.9 percent cut in real terms to funding in the past five years. And the Infometrics analysis says that we're 485 million below 2009, 2010 spending. So I suppose the point is whatever figures we use from that, the point is – in real terms, health funding is going backwards under your government, your critics would say.

No. No, Lisa. No, no. Yeah, well, critics would say that because they're critics. But, look, if you look at those analyses, they are looking at the spending track that Labour was on, so if we'd continued on the same spending track, there would have been more money into health. Labour put a lot of money into health, but they delivered fewer services, so they delivered fewer elective operations. But so they are wrong to say that. Health funding has not been cut.

So you dispute the Infometrics figure? You dispute the Infometrics figures?

Absolutely, yes.

The Greens are wrong, and so is the CTU?

Yeah, they are, yeah, because what they're talking about is a change in the spending track, not the absolute amount. So there's no way you can say that health funding has been cut.

Minister, if you spend just an extra dollar each year, you're improving the expenditure. It's about keeping pace in real terms, isn't it?

Well, no, look, that would be a silly analogy. Look, we've actually put a massive increase into health. We've fully funded demographics. There's been a lesser factor for inflation, but, actually, when you look back over the last year, funding has been ahead of inflation.

All right, I want to look at the DHBs. They're having to make 178 million in savings in the 2015-2016 year through efficiencies, so how much have they managed to save so far?

Well, that is a tiny drop of their overall budget. It's a 1 percent efficiency dividend, and they should be able to find that, quite frankly. They've got ongoing programmes to do that.

So how much have they managed to save so far?

In this financial year, I haven't got the figures in front of me, but, look, they are under a lot of pressure to keep to the financial track. And what we've done, we've decreased deficits from 160 to 60 million over our times.

So, Minister, sorry, you—

They greatly reduced them.

So, Minister, you can't tell me how much they've saved so far?

Well, no, I haven't got the analysis of how much they've saved so far in front of me.

Okay, well—

But we've set a very clear expectation that there'll be a 1 percent efficiency dividend.

As at February of this year, they'd saved 80 million, so, well—

Well, I'm not taking that figure for granted. Where have you got that figure from?

That was from official information released to the Labour Party.

Oh, it's a Labour Party figure. Well, look, I'd have to look—

No, it's official information, Minister, released to the Labour Party.

Yeah, but I'd have to look at that document, Lisa.

Okay.

If you want to discuss the specific document, you should give it to me in advance, because I dispute that.

Okay, so you think it's reasonable for them to make a 1 percent efficiency gain?

Yes, I do.

Because some people will say that lemon has been well and truly squeezed, yet they also now have to come up with an extra 11 million, don't they, for Pharmac now? So how do you expect them to pay for that?

Well, each year, actually, they have put more money into Pharmac, and you haven't seen the final health budget, which will be revealed in three weeks' time. So I think you've got to look at the whole context of the budget.

Aren't a significant number of those gains being made by capping staff or not filling positions?

In some DHBs they're not filling positions. That's correct. So they've done that in Hutt Valley DHB.

So doesn't that count—?

But overall there's five and a half thousand—

Does that not come at a cost to people's health?

Lisa, overall there's— Lisa, there's five and a half thousand more doctors and nurses in the system overall, and, actually, if you're talking about cost to people's health, look, the mortality and morbidity statistics on a national basis are improving over time.

All right. We now know that 7000 people needing surgery were declined a specialist appointment over three months of last year. Now, those people met the criteria for a referral, but the DHBs didn't have the resources to see them – the appointments or the resources to see them. So they simply don't have enough funding, don't they?

Well, look, no one's ever said there's too much funding in health and you should send the dollars back. The bigger point there is we are the first government to measure the whole pathway of the GP referral. 87 percent of people referred by their GP did get a specialist appointment. We've increased the specialist appointments by 26 percent, so 110,000 more appointments per year. So out of that number of referrals, yeah, 5 percent were sent back to their GP, 8 percent of the referrals were held. So, actually, overall we're going to be gathering the data. This is the first tranche to understand what actually happens through the path of that referral. If you look at waiting lists, I mean—

Minister, I'm just wondering, then, those 7000 people, which you say are about 5 percent.

Yeah.

How much sicker have they got? What do we know about whether their conditions got worse as a consequence? Because health experts tell us that that is what has happened for a number of people. So what do you know about them?

Well, I'm not sure if that's—

What do you know about them?

We haven't got all that information yet, but it is then back to the GP to further liaise with their DHB about further treatment options for those people. And, look, there's always been financial thresholds set by DHBs. That has been a factor for many many years, and DHBs have never been able to offer every operation and every procedure to everyone who wants one.

Precisely how many people are waiting for operations in New Zealand?

Look, we've got 2000 people waiting over four months. Eight years ago, there were 30,000 people waiting over six months.

Minister, those—

That's a huge decline.

Minister, those are the people on the four-month list, aren't they, which is— you only get on the list if they can deal with you within four months. But there are other people who need surgeries like these people who didn't get to specialist appointment. So overall, the overall number for people who need surgery, who are waiting for surgery in this country, what's that figure?

Well, that's what we're building the picture of, so we've had that first tranche of data from July to September quarter 2015, which say there were 158,000 referrals there.

But you don't know?

87 percent—

You don't know that number, the total number of people waiting?

Yeah, no, I do.

Well, what?

I'm just telling you. 87 percent of those people got their referral, 5 percent were turned down, 8 percent were held for further investigation, so it's 5 percent of 158,000.

The raw number?

Well, 5 percent of 158,000, so that must about, you know, 10,000.

The bottom line is can you guarantee that in this year's health budget the money for health will keep pace with inflation and population needs in real terms? Can you guarantee that?